December 02, 2008

Rising iron ore prices send steel ingots up INR 1,000 per tonne

It is reported that price of steel ingots has shot up by close to INR 1,000 per tonne in the last week due to shortage in supply of iron ore.

Mr JK Arora MD of Supreme Group said that "Steel prices have been volatile as iron ore supply has been tight due to problems in the mining areas in Orissa."

According to Mr Arora, demand in India has dulled a bit due to high interest rates, which have prompted large number of payment defaults in the housing sector. This has led to a slowdown in construction, as fresh demand is not picking up. The demand was a bit slow during the monsoons, as construction had stopped.

Steel ingot production was seeing a slowdown due to shortage of both sponge iron scrap and iron ore. This is also making production of ingots expensive. Despite an export duty being imposed on iron ore, the supply is not enough to cater to the demand. However, a weaker dollar and stronger rupee will allow for some respite as imports could become lucrative.